Termination of Long-Term Contracts of (Un)fixed Duration

Update: This article from 2018 was completely revised on August 3, 2026.

Can contracts of indefinite duration be terminated, and if so, under what conditions? Whether a contract of indefinite duration can be terminated—and, if so, under what conditions—is determined by the terms of the contract and by the applicable statutory provisions.

Contracts of indefinite duration—in which the parties have not agreed on an end date—are, in principle, terminable. However, a reasonable notice period must be observed. The situation is different for fixed-term contracts. In principle, these cannot be terminated, unless, for example, there is a breach of contract or the contract is terminated by mutual agreement.

What are contracts of duration again?

In a continuing contract, the parties commit to ongoing performance or agree to a series of performances over a longer period of time. It is therefore not limited to a single specific performance that must be carried out. Well-known examples include partnership agreements, distribution agreements, and franchise agreements. The law does not provide for a general rule governing the termination of continuing contracts of indefinite duration. Termination of such an agreement can have significant consequences for the other party. If the parties have agreed on a termination provision, that provision serves as the starting point.

Sufficiently compelling grounds are sometimes required

The sufficiently compelling grounds stem from a Supreme Court ruling dated December 3, 1999 (Latour v. De Bruijn). This ruling concerned a French winery (“Latour”) that had terminated a distribution agreement with a Dutch wine buyer (“De Bruijn”). Because the parties had been doing business with each other for over a hundred years, the Supreme Court ruled that, for a valid termination of this agreement—which contained no provisions regarding the manner of termination—Latour needed a sufficiently compelling reason.

In a more recent Supreme Court ruling dated June 14, 2013 (Auping v. Beverslaap), the Supreme Court held that no sufficiently compelling grounds for termination were required, even though the parties had been working together for 8.5 years and Beverslaap depended on Auping beds for a large portion of its revenue.

Overview

In its ruling of February 2, 2018 (Goglio/SMQ), the Supreme Court once again addressed the terminability of open-ended contracts. In the aforementioned ruling, the Supreme Court provided another concrete overview of the rules governing the termination of open-ended contracts.

• First, it must be determined whether the open-ended contract itself contains any provisions regarding its terminability or whether the law provides for such matters;
• If that is not the case, then the agreement is, in principle, terminable;
• However, in the interest of reasonableness and fairness, and depending on the circumstances of the case, termination may be possible only if there is a sufficiently compelling reason for doing so; and
• In addition, it may be the case that a specific notice period must be observed, or that an offer to pay compensation or damages must be made.

However, it is possible that a contract of indefinite duration may, according to the parties’ intent, be non-terminable.

In its ruling of November 29, 2024, in the case between Leen Bakker and four of its franchisees, the Supreme Court held that the failure to offer compensation upon termination of a continuing contract does not automatically render the termination invalid.

The Supreme Court ruling of May 16, 2025, centered on a dispute between parcel delivery company DPD and two transportation companies. This ruling addressed the question of the extent to which the parties could deviate from a contractual termination provision agreed upon between them. The Supreme Court confirmed that the agreement between the parties was decisive, but that in special cases there is scope to mitigate the consequences of termination. This can be done, for example, by paying compensation.

A Tricky Subject

In short, terminating open-ended contracts—which contain no provisions regarding termination—is a complex matter. The requirements for a legally valid termination appear to depend heavily on the circumstances of each case.

So don’t just cancel such agreements on a whim; always seek advice from an expert. You may well be required to pay compensation or damages, which can add up to a considerable amount depending on the term of the agreement.

Especially in the case of an agreement between professional parties, it makes sense to include clear provisions regarding termination in the continuing contract. Such provisions must, at a minimum, specify whether and when the agreement may be terminated, subject to what notice period, and what the consequences of termination are (e.g., whether or not compensation is due, whether or not deliveries will continue during the notice period, whether or not the parties may place (additional) orders during the notice period, etc.).

Want to know more?

If you have any questions about contracts and their termination, please feel free to contact the attorneys at Fruytier Lawyers in Business—your inquiry is completely confidential and without obligation. We would be happy to assist you with advice and support.